'All eyes are on Asia-Pacific,' said US transportation secretary Federico Peña before leaving on a 17-day tour of the region in November. Declaring he had done all he could for now in Europe, Peña is faced with at least three potentially explosive situations in Asia.

The latest drive by the DoT in Asia-Pacific follows the breakdown of liberalisation talks with the UK at the end of October, with the talks being held hostage to President Bill Clinton's wider battle with Congress.

Peña's first apparent success in Asia-Pacific followed his arrival in Thailand, where both sides agreed to talks on a new bilateral. They claimed agreement on a 'basic framework,' but offered no hints on how to bridge the crucial differences on fifth freedoms.

In India, Delta and Tower Air have raised the stakes in bilateral talks with separate complaints alleging that New Delhi is either blocking increased flights or offering a 'mishmash' of slots at Bombay. India wants to renegotiate its bilateral and is seeking a five year delay on designation of more US carriers. The US may gain some leverage from the recent codeshare agreement between Air India and United Airlines, but both sides are still far apart.

The biggest US worry is still Japan, where United's vitriolic attack and request for more fifth freedom routes has already raised tensions. Indeed, Japan and the US have imposed modest sanctions on each other's carriers since mid-October. Now Tokyo has asked Washington for a special meeting to discuss United's alleged breach of rules limiting fifth freedom traffic on United's Tokyo-Seoul route. This dispute could easily escalate.

David Knibb

Source: Airline Business